livestock marketing

Livestock Marketing Reformers Face Uphill Battle in Congress

Dan Cattle, Marketing

livestock marketing

Livestock marketing reforms in Congress face an uphill battle, despite reaching a bipartisan deal to boost price discovery and competition in the highly concentrated beef industry. This week, the Cattle Price Discovery and Transparency Act was introduced. But Iowa Senator Chuck Grassley admits his bipartisan deal to set regional mandatory minimum levels of negotiated versus contract trades still faces industry pushback. That includes from the National Cattlemen’s Beef Association and the North American Meat Institute, who represents the packers and processors.

 “I’m sure they don’t want the status quo affected at all, but they’ve got to know that there’s real negative to how they run their business and to how fair they are, and I would expect them not to like it, but if they’re smart, they would endorse it.”

Grassley is more optimistic about cooperation from Ag committee chair Debbie Stabenow.

 “We’ve had very promising discussions with chairman Stabenow, and I think they know how strongly we feel about it, and I’m sure there’s a big majority within their committee that feel very strongly about doing something about this.”

The Cattle Price Discovery and Transparency Act is sponsored by Senate Republicans Grassley and Deb Fisher, but also has bipartisan support from Senate Finance Chair Ron Wyden and Ag Senator Jon Tester.

“These talks couldn’t really get down to serious discussion until Fisher and I reached our compromise, and then, you want to remember that American Farm Bureau is supporting the bill, and it has bipartisanship.”

The proposal is endorsed by a number of state and national organizations, including the American Farm Bureau, the National Farmers Union, and many others.

(From the National Association of Farm Broadcasters)

Fischer Leads Cattle Market Price Discovery and Transparency Bill

Bipartisan Legislation Will Ensure Fairness Across Beef Supply Chain

(WASHINGTON, D.C./Nov. 9, 2021) – Today, U.S. Senator Deb Fischer (R-Neb.), a member of the Agriculture Committee, today announced the Cattle Price Discovery and Transparency Act. Sen. Fischer has long worked to facilitate price discovery and address the lack of transparency in the cattle market. The bipartisan compromise legislation includes a series of provisions to ensure every segment of the beef supply chain can succeed. 

Senators Chuck Grassley (R-Iowa), Jon Tester (D-Mont.), and Ron Wyden (D-Ore.) joined Fischer in announcing the compromise legislation.

“Robust price discovery ensures that all members of the beef supply chain — cow-calf producers, feeders, packers, and consumers — can be successful. The foundation of price discovery in the cattle market is negotiated cash sales. One or two regions of the country should not have to shoulder the burden of price discovery and that’s exactly what has been happening. Furthermore, even regions that primarily use alternative marketing arrangements (AMAs) such as formula contracts predominantly rely on negotiated cash sales to set their base prices. Our compromise proposal takes regional differences into account and ensures fairness for every segment of the supply chain,”  said Senator Fischer.

“I frequently hear from Iowa’s independent cattle producers about their struggle to get a fair price for their cattle while the nation’s four largest packers operate in the shadows. I pushed for hearings in the Senate’s Agriculture and Judiciary committees to shine a light on the market unfairness and now have partnered with a bipartisan group of senators to develop a solution. This bill takes several steps to improve cattle price transparency and will improve market conditions for independent producers across the country,” said Senator Grassley.

“Price discovery is a public good. Cash and negotiated grid market participants invest resources to discover cash market prices for their respective regions and the entire industry. Until price discovery participation is better valued by some market participants at all points in the supply chain, live cattle market price negotiation will continue to decrease until there is little to no negotiated trade left and outside markets will have to be relied upon for price determination. Thank you to Senator Fischer for her continued focus on this important issue,” said William H. Rhea III, President of the Nebraska Cattlemen.

“For nearly two years, Nebraska’s cattle producers have been asking for needed reform within the cattle marketplace. The Cattle Price Discovery and Transparency Act delivers that reform which will provide more price discovery and needed transparency to arguably one of the more complex agricultural marketing systems which exist. Cash cattle transactions are one of the truest ways to provide price discovery, yet a one size fits all approach rarely works to address any issue. The sound public policy concepts developed and the overall leadership provided by Senator Deb Fischer is truly appreciated by Nebraska’s cattle producing families. Now is the time to move this important piece of legislation forward to ensure our nation’s cattle industry maintains a bright economic future,”said Mark McHargue, President of the Nebraska Farm Bureau Federation.

The senators plan to introduce the Cattle Price Discovery and Transparency Act in the coming days. The legislation will:

  1. Establish regional mandatory minimum thresholds of negotiated cash and negotiated grid trades based on each region’s 18 month average trade to enable price discovery in cattle marketing regions. In order to establish regionally sufficient levels of negotiated cash and negotiated grid trade, the Secretary of Agriculture in consultation with the Chief Economist, would seek public comment on those levels, set the minimums, and then implement them. No regional minimum level can be more than three times that of the lowest regional minimum, and no regional minimum can be lower than the 18-month average trade at the time the bill is enacted.
  2. Require the U.S. Department of Agriculture (USDA) to create and maintain a publicly available library of marketing contracts between packers and producers in a manner that ensures confidentiality.
  3. Prohibit the USDA from using confidentiality as a justification for not reporting and make clear that USDA must report all LMR information, and they must do so in a manner that ensures confidentiality. 
  4. Require more timely reporting of cattle carcass weights as well as requiring a packer to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days.

The following national groups have endorsed the bill: American Farm Bureau, U.S. Cattlemen’s Association, and National Farmers Union.

Click here to read an Omaha World-Herald story outlining the issues with the beef supply chain and Senator Fischer’s efforts to address the problem.

Click here for a one-pager on the regional mandatory minimum provision. 

Click here for a section by section summary of the bill.